Long-term trends like the disruption of brick-and-mortar retail and the growth of personalized marketing created challenges and opportunities for retail. Now, with the pandemic encouraging millions of consumers out of the physical stores and into digital channels, it seems that the long-awaited inflection point has finally arrived.
Among the many retail changes, the need for improved retail inventory management became apparent. With less footfall and traffic in-store, retailers struggled with large amounts of unsold and misplaced inventory. Retailers also faced uneven and unpredictable demand surges driven by consumer uncertainty, resulting in supply shortages and global supply chain disruption. We call this the bullwhip effect.
Recently, Oracle Retail’s Lara Livgard and analyst guest speaker Jon Duke, research VP of Retail Insights at IDC, hosted a webinar to examine these trends and why it’s more critical to support your inventory processes with the right retail technology.
“We’ve had several retailers come to us who scrambled to implement new pandemic customer journeys to stay in business. Retailers now realize that they can’t sustain these journeys,” said Lara Livgard, Senior Director of Strategy, Oracle Retail. “We invited Jon Duke to discuss how accurate inventory, more efficient processes, and intelligence is the key to optimizing retail inventory placement.”
Customer service innovation accelerated an unprecedented pace at the outset of the pandemic, with retailers everywhere rapidly embracing alternative store models and redefining curbside pickup and extended capabilities, among other ideas. There is still some question whether these customer preferences will stick in the long run, but it’s clear the pandemic has drastically changed expectations.
A recent IDC Retail Consumer Insights Survey found that 59% of customers are likely to shop elsewhere if they can’t buy online and pick up in-store. In comparison, 48% said they’d find another retailer if they can’t see in-store availability online. Those findings align with recent Oracle consumer research that found that 47% of global shoppers feel that their top complaint about a bad shopping experience is learning merchandise is out-of-stock. Sixty-three percent said they would instead try a new brand than wait for a restock.
“I think what we’re seeing is that consumers have come to rely on these innovations,” said Duke. “They’re changing behaviors during the pandemic, and these (ideas) are becoming ingrained, and there is some expectation that they’ll continue with strength in years to come.”
With solutions like those offered by Oracle Retail, brands can decrease manual efforts associated with implementing new customer service innovations. For example, Store Inventory Operations Cloud Service streamlines the picking and packing of customer orders, while Inventory Optimization proactively aligns inventory to service level targets to increase customer satisfaction.
If COVID-19 has taught the industry anything, it should be how abruptly things can change. Before the pandemic, consumers told IDC they spent roughly 38% of their retail dollars online. During the pandemic, those estimates have jumped to almost 73% online purchases. In essence, e-commerce went from roughly one-third of the business to nearly three-fourths over mere weeks – even days. It would not be easy to script a more compelling case for embracing agility in external and internal retail operations.
“It’s not just about the customer-facing components of retail inventory management,” said Duke. “Retailers are still thinking about the aspects of that solution that helped them be flexible enough to future-proof their organization and improve their analytical capabilities.”
“I agree. Suppose retailers don’t take the time to invest in a solid foundation of reliable inventory management across their organization. In that case, they cannot properly take advantage of more advanced Artificial Intelligence-driven capabilities,” commented Lara.
When appropriately implemented, modern retail inventory management technology can enable more efficient and accurate decision-making every step of the way. Knowing which products are available in real-time allows for a more precise store- and market-level demand forecasting across all sales channels, including on-the-fly changes in response to significant events, such as a pandemic.
That leads to improved omnichannel and e-commerce response time in the short term, resulting in fewer disappointing sales experiences. Coupled with AI-driven capabilities that automate the brand’s assortment, fulfillment, and replenishment processes, retailers can experience a fully optimized and agile end-to-end sales process.
The top-to-bottom advantages of a modern inventory management solution provide a compelling case for implementation, but it’s not always that easy. The reality of retail is that any technological advancement necessarily comes with challenges. Many brands lack organizational alignment around the need for better inventory. Even if there is an agreement, some brands aren’t financially or strategically ready to invest in the tools they need.
“It’s great to have that goal of end-to-end inventory management and optimization, but there are real practical challenges that we hear a lot about,” said Duke. “As you think about what’s involved in implementing some of the core systems and analytical capabilities, it’s large-scale, time-intensive implementation. And that’s a pretty daunting task to take that on for really any organization.”
In light of these challenges, Oracle Retail continues to accelerate its cloud offerings, allowing for faster and more standardized implementations. Another way to get executive buy-in is to suggest opportunities for smaller, quick-start programs that can gradually improve inventory processes while freeing up investment capacity for additional digital transformation efforts.
“We are working with several retailers who want to get to optimization, but recognize that without accurate store inventory figures, optimization will fall flat. Through adopting standard processes and rapid deployment methodologies, our customers are taking just months to get accurate inventory figures - allowing them to move from being reactive to proactive with confidence,” said Livgard.
In a way, retailers’ digital transformation processes often mimic the same growth story as the retail industry at large. Once retailers have successfully begun their digital journey, at the pace that works for them, the solutions supporting these innovations will start paying off in earnest – gravity can do the rest.
While everyone around the world continues to navigate the uncertainty of COVID-19, Oracle Retail is committed to supporting your business and to providing continuity of service through this challenging time. Visit the Oracle Retail COVID-19 Resource Center. Oracle provides retailers with a complete, open, and integrated platform for leading retail solutions, cloud services, and hardware that are engineered to work together.